Genesis Energy delivers steady earnings in FY17

Genesis made two key acquisitions during the year. Photo / File

Genesis Energy has quietly launched a new brand identity at the same time as it released today's earnings results for the year to June 30 as the country's largest electricity provider by customer numbers seeks to enable customer control of energy use through emerging digital technologies.

Chief executive Marc England told BusinessDesk the company would start communicating with customers about the changes in a month's time in a move that follows a year in which the company changed key retail executives, replaced Contact Energy in the FlyBuys loyalty scheme, bought Nova Energy's LPG business, and took a larger stake in the Kupe oil and gas field as part of a range of initiatives to improve its competitive position.

"I don't want to give too much away, but in essence I want a customer to feel comfortable when they turn things off, but comfortable also when they turn things on," he said.

The focus would not be on having the lowest power prices, but in being the power company that added the most value for its customers. It was time to stop "rewarding promiscuity" by paying customers either to switch provider or to return to their existing one, but to use increasingly available, low-cost, digital technology to give customers control over their energy use.

It was also time to revive the perceptions of Genesis, which customers had told the company was "fairly dull, boring, (and) staid" to a forward-looking, technologically enabled firm.

Also revealed in today's results is the fact that the company's lesser-known second brand, EnergyonLine, doubled its profitability last year. EOL, which is currently running a humourous TV advertising campaign based on "No Regerts" (sic), was aimed at younger, more mobile and "footloose" customers who might not care too much about saving energy, using a lower cost on-line model that targeted profit margins no less than those achieved by the main Genesis brand.

The Auckland-based company posted earnings before interest, tax, depreciation, amortisation and changes in the value of financial instruments of $335 million in the 12 months to June 30, a 1 per cent fall on the previous year but ahead of previously announced earnings guidance.

While light on detail of the EOL profit doubling, the company disclosed that across its total customer base, including Genesis customers, gross electricity margin per customer rose from $358 to $416 in the year under review. Gross gas margins also rose, from $314 to $331 per customer.

Speaking to an investment analysts' briefing about the future of Genesis's 1,000 Megawatt gas and coal-fired power station at Huntly, where two of four units are mothballed, England said that bringing one of the two unused units back into production represented "New Zealand's cheapest next unit of new generation".

The company had imported coal during the financial year to ensure it had sufficient stockpiles for dry years when thermal power stations are needed to make up for shortages of hydro generation, and that it would seek to deal with local supplier Talleys/Bathurst.

The Genesis share price softened by 0.8 percent in trading on the NZX to $2.44 by mid-afternoon.

England was dismissive of Contact Energy chief executive Dennis Barnes's recent comments that Contact might reduce its supply of electricity by around half a Terrawatt hour annually to bolster wholesale electricity prices, saying Barnes had found "a clever way of saying 'we mispriced some contracts in the past'."

The other NZX-listed electricity company to report earnings today, Mercury, saw its share price rise 1.9 per cent to $3.585 by mid-afternoon.

Mercury's ebitdaf rose 6 per cent to $523m in the year to June 30, allowing payment of an increased and a special dividend.

Mercury chief executive Fraser Whineray told BusinessDesk it was the company's 10th consecutive year of dividend growth.

Adding to the result was $26m in cash from the sale of rights to carbon sequestered in plantation forests that Mercury determined it no longer needed after closing down its gas-fired power plant at Southdown, in Auckland.